The global system and national politics

A key insight that is often lost in our national political debate is that we are but a piece of a truly global socio-economic system.  This post seeks to briefly look at that system – i.e. global capitalism – and consider how it intersects with national politics.  We’ll look at it from a high level point of view here while future posts will zero in on specific countries.  We’ll find that the source of political stalemate, the worldwide frustration that political parties can’t seem to address our deeper problems, will not be found if we limit our perspective to just the national level.  If it could be found there, after all, the exact same stalemate wouldn’t exist everywhere.   The real problem lies well beyond each nation’s endless and seemingly pointless political battles between party A and party B; it rests instead in the nature of the global system itself; a system which simply can’t be controlled at the national level without ending the system itself.

Global capitalism as a system can be seen to have two key large scale components – unrestricted trade and unrestricted capital mobility across national boundaries.  (There have been minor exceptions but this is its essential nature.)  The system’s been around for centuries but collapsed in the chaos of the Depression and the two World Wars. This apparently failed global system, however, was resurrected after World War II through conscious efforts of the then hegemonic US government – which itself was primarily influenced by the international interests of money center banks in New York and large corporations seeking export markets.  The system has moved to a whole new level in the past few decades due largely to dramatic advances in communication and information technologies.   It has now become far more dominant than at any point in the past, so much so that I believe it significantly threatens individual security, political freedom, and world peace.  This rather depressing conclusion can be demonstrated by looking into the inherent logic of the system and its actual performance across a number of countries.

Given the facts of unrestricted trade and capital movement, a system wide logic becomes quite easily discernible.  We can predict that the size of production units will become ever larger due to economies of scale and that huge multinational corporations will dominate every industry.  Smaller firms will find it ever harder to compete.  We can also see that the success of a particular geographic region will depend on its ability to attract and retain the ever fewer large corporations, each of which have the option of locating anywhere in the world.  The corporation therefore enjoys an exceptionally strong bargaining position versus the state and its people.  The consumer within this system can be predicted to benefit somewhat from lower production costs but these will be offset by oligopoly pricing power and increased worker insecurity.

Despite the global nature of the system, politics is universally contained within national boundaries.  The state attempts to mediate between the demands of the system and those of its population but it’s a largely futile exercise.  No state can deal with ‘the economy’ since only a fragment of it lies within its borders.  And actions that are perceived to be against the interests of business will result in capital flight and business relocations.  Unless the fundamental rules of the game are challenged, each state is extremely limited in what it can do.  This results everywhere in nationally colored  versions of the same essential politics.  The apparent divide between center left and center right parties reflect only moderate differences in rhetoric, personalities, and implementation methods.  This is clearly seen throughout the world today.

The fundamental state strategy within the system boils down to one of competition to attract and retain corporations by maintaining low taxes on wealth and profits, lowering wage costs and increasing labor ‘flexibility’, minimizing regulation, discouraging unions, and aggressively promoting ‘national champions’ around the globe.  It’s zero sum but it’s the only viable strategy given the rules of the game.  It’s not popular and frustration is rising everywhere.  The strategy, relying as it does on competition, is also not conducive to peace as each state is truly in a struggle for existence and one should not expect the losers to meekly accept the ‘market determined’ result.  Rising tensions can be seen today in US relationships with China, the EU, middle east, and Russia; wars in Africa; and the populist politics in Latin America.  Popular unrest should also rise but to date things seem surprisingly quiet.

We are not helpless however.  Large political units such as the US and EU have it within their power to successfully challenge the global system.  What is required, though, is a much broader definition of politics – one that rejects the differentiation between ‘the economic’ and ‘the political’.   The very concept of politics must be widened to encompass the truly political – the constitutive dimension of society, the rules of the game.  This of course would be a direct challenge to the existing world order – a most difficult exercise to say the least.